It's Pretty Unlikely The $2,500 Tata Nano Will Make It To The US

In 2008, when Tata Motors announced that it was developing a
sub-$2,500 car for Indian consumers, the world sat up and took
notice.

Heck, $2,500 was half the price of the cheapest car available in
India at the time.

Given the country's growing middle class, analysts thought that
Tata's new ride — dubbed the Nano — could be a runaway hit.

It wasn't.

Apart from the Nano's impracticality — including a trunk that can
only be reached from inside the vehicle — many consumers
doubted its safety. For example, there were early reports of
electrical fires, and there was no way to add airbags to the
Nano, even for customers willing to pay a premium.

But the Nano's biggest problem was that Tata completely misjudged
its target market. Motorcycles are hugely popular in India: they
cost about half of what the Nano does, and many outperform the
Nano's two-cylinder, 38 hp engine. In the end, Indians preferred
two very cheap wheels to four less-cheap ones.

But that hasn't stopped Tata from dreaming up plans for world
domination.

Now, Tata's at it again, dreaming even bigger dreams. According
to AutoNews, the company's head
honcho, Ratan Tata, recently announced plans for a
revamped version of the Nano for European and U.S.
drivers.

Mr. Tata was unwilling to offer many specifics about the new
model. However, he did say that its engine will be larger and
that, unlike its Indian cousin, it will come with luxurious
amenities like power steering.

Most intriguingly, Tata said that the vehicle will have a sticker
price under $10,000, and it will arrive within three years.

In discussing the model's prospects, he pointed to the popularity
of small cars like the MINI Cooper and the Smart fortwo,
implying that Tata's lower price-point would lure away some of
those consumers.

Our take

We hate to be so schadenfreudy so early in the work week, but it
sounds as if Mr. Tata is setting up his company for a spectacular
failure, the likes of which hasn't been seen since...well, since
the launch of the Nano in India. Or since Ashlee Simpson's
last appearance on Saturday Night Live.

And just being small isn't enough: you have to have a great
design to go with it. If he'd look at Smart's blood-red balance sheets, he might
understand that. Tata will have to make vast improvements to the
Nano's looks — not to mention its performance and safety features
— before it has any hope of winning over American consumers.

But most daunting of all for an automaker like Tata is the
question of how to sell its products.

Tata has no dealerships in the U.S., and therefore, no ready
means of selling vehicles. True, the company owns Jaguar and Land Rover, but the likelihood
of selling a cheap, sub-$10,000 microcar alongside five- and
six-figure sedans and SUVs seems remote. Unless Mr.
Tata
plans to pull a Tesla, building "information centers" instead
of "showrooms", he's got a very long row to hoe. (His colleagues
at Mahindra, who are also based in Mumbai,
can vouch for that.)

That said, Tata might have better luck in Europe, where customers
are used to driving significantly smaller cars than we are in the
U.S. Europe is also facing serious economic problems, which could
make a cheap car more competitive than in the U.S., where the
economy is slowly recovering.